banner2 Mortgage Fraud End Sought By Illinois

 

 


Mortgage fraud solution sought by legislature

The problem of mortgage fraud is a common one throughout the United States. It’s a problem that is of major concern to everyone - states, cities and individuals, because ultimately, everyone pays the cost of fraud. Homeowners pay for it in terms of higher taxes and higher interest rates on their loans. Cities and states pay for it in terms of having to deal with the additional crime brought into neighborhoods by the criminals the perpetuate the fraud. In the latest attempt to do something about it, the Illinois legislature is prepared to tackle the problem in the form of the recently proposed Mortgage Rescue Fraud Prevention Act.

The proposed Act, while written to combat a variety of different types of predatory lending, is intended to primarily attack the so-called “mortgage help” scam. With this type of scam, most often advertised using signs on telephone poles, companies offer to “help” people who are having problems keeping up with their bills by offering to do one of the following:

  • Negotiate with the lender to arrange more lenient financing.
  • Take ownership of the house for a period of about a year so that the owner can clear up debt problems. The owner will continue to live in the house as a renter and may buy the house back later, when he or she is in a more financially stable state.

The problem with both of the arrangements above is that the “help” usually involves simply taking the money and doing nothing in the first scenario and evicting the owner from the house in the second scenario. Neither one does the homeowner any good and legislators


are tired of the stories of homeowners who have been swindled out of their own property through a deed theft scam.

The proposed bill would require those consultants to provide homeowners with a written contract that spells out specifically what they are going to do to help them. In addition, the owner of the home would have the right to cancel the contract prior to any services being performed. In cases where the homeowner has granted the title of the house to the consultant, he or she would have the right to cancel the agreement at any time.

Violations of this law would be met with criminal penalties, which would probably include fines and/or jail time.

In addition, the bill would severely limit the use of a “quitclaim deed” in ways that would prohibit their use in stealing property. Quitclaim deeds are documents which a owner or co-owner of a property can use to publicly declare that they are relinquishing their ownership in the property. While quitclaim deeds have legitimate uses, they are often forged by thieves who use them to obtain loans for property that they do not actually own.

The problem of mortgage fraud costs taxpayers billions of dollars per year and is continually growing. While the problem is most prevalent in the southeastern United States, it is spreading to other parts of the country rather rapidly. Illinois legislators hope to spread the growth of the problem by passing this and other similar bills intended to address other types of fraud soon.
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